report for the half year ended june 30, 2018 · independent auditor’s review report scope of...

REPORT FOR THE HALF YEAR ENDED JUNE 30, 2018

ContentsCorporate Information

Directors’ Review

Directors’ Review (Urdu)

Independent Auditor’s Review Report

Unconsolidated Condensed Interim Statement of Financial Position

Unconsolidated Condensed Interim Pro�t and Loss Account

Unconsolidated Condensed Interim Statement of Comprehensive Income

Unconsolidated Condensed Interim Cash Flow Statement

Unconsolidated Condensed Interim Statement of Changes in Equity

Notes to the Unconsolidated Condensed Interim Financial Statements

Consolidated Condensed Interim Statement of Financial Position

Consolidated Condensed Interim Pro�t and Loss Account

Consolidated Condensed Interim Statement of Comprehensive Income

Consolidated Condensed Interim Cash Flow Statement

Consolidated Condensed Interim Statement of Changes in Equity

Notes to the Consolidated Condensed Interim Financial Statements

1

2

4

5

6

7

8

9

10

11

29

30

31

32

33

34

Corporate Information

Board of Directors Lt Gen Syed Tariq Nadeem Gilani, HI(M) (Retd) - Chairman Lt Gen Javed Iqbal, HI (M) (Retd)Lt Gen Tariq Khan, HI (M) (Retd) Mr. Qaiser JavedDr. Nadeem InayatMr. Manzoor Ahmed - NIT NomineeMr. Kamal A. ChinoyMr. Syed Ahmed Iqbal AshrafMr. Mushtaq MalikBrig. Saleem Ahmed Moeen SI (Retd) *Mr. Abid Sattar - President & Chief Executive

1

Board Audit Committee Syed Ahmed Iqbal Ashraf - Chairman Mr. Qaiser JavedDr. Nadeem InayatMr. Manzoor Ahmed

Auditors A. F. Ferguson & CoChartered Accountants

Legal Advisors RIAA, Barker GilletteAdvocates & Corporate Counselors

Shariah Board Mufti Muhammad Zahid - ChairmanMufti Ismatullah - MemberDr. Muhammad Tahir Mansoori - Resident Shariah Board Member

Company SecretaryRegistered Office AWT Plaza, The Mall, P. O. Box No. 1084

Rawalpindi – 46000, Pakistan.Tel: (92 51) 8092624UAN: (92 51) 111 000 787Fax: (92 51) 2857448E-mail: [email protected]

Registrar & Share Transfer Office Central Depository Company of Pakistan Limited Mezzanine Floor, South Tower, LSE Plaza19-Khayaban-e-Aiwan-e-Iqbal, Lahore Tel: Customer Support Services (Toll Free) 0800-CDCPL (23275)Tel: (9242) 36362061-66Fax: (92 42) 36300072Email: [email protected]: www.cdcpakistan.com

Website www.akbl.com.pk

Social Media /askaribankpakistan/askari_bank

Mr. Umar Shahzad

Entity Rating Long Term: AA+Short Term: A1+By PACRA

* Appointed by the Board of Directors subject to Fit & Proper Clearance from the State Bank of Pakistan.

mailto:[email protected]

Directors' Review

Dear Shareholders

The Directors present the unaudited condensed interim unconsolidated �nancial statements for the quarter and six months ended June 30, 2018. The �nancial results are summarized as under:

2

The Bank's pro�t before provisions and taxation for the half year ended June 30, 2018 was recorded at Rs. 4.07 billion, as against Rs. 3.82 billion, for the corresponding period last year, re�ecting an increase of 7 percent. Pro�t after taxation declined by 17 percent, to Rs. 2.52 billion mainly due to decline in aggregate provision reversals compared to the corresponding period last year. Resultantly, earnings per share for the half year were reported at Rs. 2.00 as against Rs. 2.40 for the previous corresponding period.

Net mark-up income increased by 14 percent despite the adverse impact of maturities of high yielding government bonds on core revenues. Non fund incomes declined by 16 percent due to a 91 percent reduction in gain from sale of securities, mainly PIBs. However, contribution from business NFIs remained strong and increased by 49 percent driven by; a 21 percent improvement in fee, commission and brokerage revenue, and income from dealing in foreign currencies which increased to Rs. 944 million against Rs. 404 million for the same period last year. Administrative expenses were kept in check, increasing by 4 percent as against the corresponding period last year.

Customer deposits increased by 9 percent during the six months under review, closing at Rs. 573 billion as compared to Rs. 526 billion at year end 2017. The Bank maintained focus on re-pro�ling of deposits re�ected by a 13 percent increase in aggregate current deposits. Gross advances were reported at Rs. 338 billion at June 30,2018 showing an increase of 19 percent. Consequently, the Bank's ADR also improved from 54.1 percent to 58.9 percent at June 30, 2018.

During the current half year, the Bank issued its �rst ever additional Tier 1 capital in the form of listed, perpetual, unsecured, subordinated and non-cumulative debt instrument amounting to Rs. 6.0 billion. The issue was successfully closed subsequently to the half year end and the proceeds from this issue will contribute towards the additional Tier 1 capital and are aimed at supporting Bank's future growth of business.

The Bank's rating was maintained at 'AA+' (Double A Plus) for the long term and 'A1+' (A One Plus) for the short term by PACRA. The ratings re�ect relative positioning of the bank, driven by AKBL's strong Sponsors, continuous improvement in cost of funds and asset quality supplemented by comfortable liquidity position.

Net mark-up and non fund incomeAdministrative and other expensesPro�t before provisions and taxationNet reversal of provision against loans and investmentsPro�t before taxationTaxationPro�t after taxation

Basic earning per share - Rupees

Rupees in million

11,860(7,791)4,069

3194,388

(1,866)

2.00

2,522

June 30,2018

June 30,201711,323(7,506)3,8171,2165,033

(2,005)

2.40

3,028

We would like to thank our valued customers for their continued patronage and support, to the State Bank of Pakistan, the Securities and Exchange Commission of Pakistan and other regulatory authorities for their guidance, to our shareholders for the trust and con�dence reposed in us, and to our staff who continue to contribute to the organization and hence enable us to perform consistently in a challenging business environment.

Abid SattarPresident & Chief Executive

- sd -

Lt Gen Syed Tariq Nadeem GilaniHI (M)(Retd)Chairman, Board of Directors

- sd -

RawalpindiAugust 16, 2018

3

2018 3011,860(7,791)4,069

3194,388

(1,866)

2.002,522

4

2017 3011,323(7,506)

1,2165,033

(2,005)3,028

3,817

2.40

We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Introduction

INDEPENDENT AUDITOR’S REVIEW REPORT

Scope of Review

Conclusion

We have reviewed the accompanying unconsolidated condensed interim statement of financial position of Askari Bank Limited (the Bank) as at June 30, 2018 and the related unconsolidated condensed interim profit and loss account, unconsolidated condensed interim statement of comprehensive income, unconsolidated condensed interim cash flow statement and unconsolidated condensed interim statement of changes in equity and the notes to the financial information for the half year then ended (here in after referred to as the ‘interim financial information’). Management is responsible for the preparation and presentation of these financial statements in accordance with accounting and reporting standards as applicable in Pakistan for interim financial reporting. Our responsibility is to express a conclusion on these financial statements based on our review. The figures of the unconsolidated condensed interim profit and loss account and unconsolidated condensed interim statement of comprehensive income for the three months ended June 30, 2018 and June 30, 2017 have not been reviewed, as we are required to review only the cumulative figures for the half year ended June 30, 2018.

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial statements are not prepared, in all material respects, in accordance with accounting and reporting standards as applicable in Pakistan for interim financial reporting.

The engagement partner on the audit resulting in this independent auditor’s report is S. Haider Abbas.

Chartered AccountantsIslamabad: August 16, 2018

- sd -

A. F. FERGUSON & CO., Chartered Accountants, a member firm of the PwC networkPIA Building, 3rd Floor, 49 Blue Area, Fazl-ul-Haq Road, P.O. Box 3021, Islamabad-44000, PakistanTel: +92 (51) 2273457-60/ 2604934-37; Fax: +92 (51) 2277924, 2206473; <www.pwc.com/pk>

KARACHI LAHORE ISLAMABAD

5

To the members of Askari Bank Limited Report on review of Unconsolidated Interim Financial Statements

Unconsolidated Condensed Interim Statement of Financial PositionAs at June 30, 2018

Note (Rupees in thousand)

Assets

Balances with other banksLendings to �nancial institutionsInvestmentsAdvancesOperating �xed assets

Assets held for sale

Cash and balances with treasury banks

89

1011

LiabilitiesBills payableBorrowings 12Deposits and other accounts 13

14Sub-ordinated loansLiabilities against assets subject to �nance leaseDeferred tax liabilitiesOther liabilities

Net assets

Represented byShare capitalReservesUnappropriated pro�t

Surplus on revaluation of assets - net of tax 15

Contingencies and Commitments

6

(Audited)December 31,

2017

44,239,3253,193,8352,250,000

314,956,748258,693,086

10,728,827

80,720

10,769,26271,587,311

525,808,3084,992,800

--

11,115,197 624,272,878

32,435,491

12,602,60211,840,757

2,849,878

27,293,2375,142,254

32,435,491

51,028,9483,531,8204,481,150

299,756,194 312,450,963

10,492,9751,902,573

80,720

12,470,06066,178,142

573,186,6219,499,400

-

-

10,612,214671,946,43733,670,008

12,602,60215,271,194

2,140,27030,014,066

3,655,94233,670,008

(Un-audited)June 30,

2018

16

The annexed notes 1 to 23 and Annexure form an integral part of these unconsolidated condensed interim �nancial statements.

Other assets 22,465,073656,708,369

21,891,102705,616,445

President & Chief Executive- sd -

Director - sd -

Director - sd -

Chairman- sd -- sd -

Chief Financial Officer

Restated

100,755Deferred tax assets

7

Unconsolidated Condensed Interim Pro�t and Loss Account (Un-audited)For the half year ended June 30, 2018

Note

(1,216,444)

1,214,059170,585404,048

1,522,131

-176,809

3,487,632

7,406,011-

100,4907,506,501

946,439243,344815,170

2,004,953

7,834,993

9,051,437

12,539,069

5,032,568-

4,387,854-

5,032,568

3,027,615

2.40

(318,766)

1,471,360114,718943,945134,477

-263,312

2,927,812

7,703,608-

87,6207,791,228

8,932,504

9,251,270

12,179,082

4,387,854

2,521,619

2.00

(860,746)

638,213152,551225,343

1,004,815

-147,754

2,168,676

3,875,857-

55,0703,930,927

189,033243,344909,800

1,342,177

4,040,827

4,901,573

7,070,249

3,139,322-

3,139,322

1,797,145

1.43

199,498

779,23577,320

619,93241,574

-172,918

1,690,979

3,888,195-

42,3873,930,5822,264,303

-

511,5241,700,489

(1,089,102)1,122,911

4,703,404

4,503,906

6,194,885

2,264,303

1,141,392

0.91

1,233,9471,700,489

(1,068,201)1,866,235

For the quarter endedJune 30,

2018June 30,

2017

9.1

For the half year endedJune 30,

2018June 30,

2017

19,120,49410,187,990

17,641,2479,806,254

9,987,1335,283,729

8,977,5384,936,711

(481,831)-

163,065

-

(1,069,513)30,047

(23,020)

-

(91,078)-

290,576

-

(715,018)18,749

(10,519)

-

Profit before taxation

Profit after taxation

Basic earnings per share - Rupees

Provision / (reversal of provision) for diminution in the

The annexed notes 1 to 23 and Annexure form an integral part of these unconsolidated condensed interim financial statements.

- (153,958) - (153,958)


Director - sd -

Director - sd -



Gain on sale of securities - net

classified as held for trading - net Unrealised gain / (loss) on revaluation of investments

Fee, commission and brokerage income

Total non mark-up / interest income

Dividend incomeIncome from dealing in foreign currencies

Other income

Non mark-up / interest expencesAdministrative expenses

Extraordinary / unusual items

Total non mark-up / interest expenses

Other provisions / write offsOther charges

Taxation - current - prior years- deferred

Reversal of provision against non-performing loans and advances - net

Net mark-up / interest income

Impairment loss on available for sale investments

value of investments - netReversal of provision against assets held for saleBad debts written off directly

Net mark-up / interest income after provisions

Non mark-up / interest income

Mark-up / return / interest earnedMark-up / return / interest expensed

Unconsolidated Condensed Interim Statement of Comprehensive Income (Un-audited)For the half year ended June 30, 2018

8

3,027,615

1,558

1,141,392

75,072

1,797,145

70

June 30,2017


2018June 30,

2017


2018

(89,597) 17,693

(137,842)48,245

27,220(9,527)

(137,842)48,245

(89,597)

2,939,576 1,234,157 1,707,618

2,521,619

76,235

17,693

2,615,547

27,220(9,527)

2,819,404 716,350 1,154,3891,235,423(1,380,124) (517,807)(120,172) (553,229)

Other comprehensive incomeItems that are or may be reclassified subsequently to

profit and loss account Exchange difference on translation of net investment in Wholesale Bank Branch


Items that will not be reclassified to profit andloss accountRemeasurement of defined benefit planRelated tax on remeasurement of defined benefit plan

Remeasurement of defined benefit plan - net of taxComprehensive income - transferred to statement of changes in equity

Components of comprehensive income not reflected in equity

Total comprehensive income

Items that are or may be reclassified subsequently to p rofit and loss account

Deficit on revaluation of available for sale securities - net of tax

The annexed notes 1 to 23 and Annexure form an integral part of these unconsolidated condensed interimfinancial statements.


Director - sd -

Director - sd -



Unconsolidated Condensed Interim Cash Flow Statement (Un-audited)For the half year ended June 30, 2018

9


June 30, 2018

607,593(481,831)

-163,065

176,889-

(2,981,150)(53,371,698)

567,041(55,785,807)

1,700,798(5,409,169)47,378,313

(152,621)43,517,321(7,528,588)

(2,812,049)(10,830,163)

15,166,141(2,251,921)

94,007(383,279)

-

12,635,440

4,506,600(10,504)

466,7624,739,898

June 30, 2017

5,032,568(170,585)

926,028(1,069,513)

30,047(23,020)

(153,958)147,826

6,316,319(25,351,081)

583,734(18,451,028)

2,307,507(46,320,262)53,137,499

(139,529)8,985,215

(4,959,330)

(2,252,412)(7,562,626)

13,348,9221,285

86,261(722,160)551,000

13,277,339

(1,000)(1,867,550)

(355,500)4,506,483

4,387,854(114,718)

4,273,136 4,861,983

Provision / (reversal of provision) for diminution in the value of investments - net Impairment loss on available for sale investments

Reversal of provision against assets held for saleCharge for defined benefit plan

Reversal of provision against non-performing advances - netDepreciation / amortization

(Increase) / decrease in operating assets

Net cash outflow from operating activities

Net cash inflow from investing activities

Sale proceeds of assets held for saleSale proceeds on disposal of operating fixed assets

Cash generated from operations

Dividend received

4,496,09676,235

(1,868,550)1,558Exchange difference on translation of net investment in Wholesale Bank Branch

47,661,5664,600,044

51,028,9483,531,820

52,261,61054,560,768

6,377,60848,183,16054,560,768

3,847,72148,413,88952,261,610

Increase in cash and cash equivalents

Less: dividend income

Other liabilities (excluding current taxation)

Additions in operating fixed assets - net of adjustments

- (216,000)Gain on sale of asssets held for sale1,046 3,090Loss on sale of operating fixed assets

(489,526) (350,884)Payment made to defined benefit plan

10,492 12,031

Receipts / payments against sub-ordinated loansDividends paidNet cash inflow / (outflow) from financing activities

Adjustments:

Cash flow from operating activities

Increase / (decrease) in operating liabilities


Lendings to financial institutionsAdvancesOther assets (excluding advance taxation)

Bills payableBorrowings

Cash flow from investing activities

Net investments in held to maturity securitiesNet investments in available for sale securities

Cash flow from financing activities

Cash and cash equivalents at beginning of the periodCash and cash equivalents at end of the periodCash and cash equivalents at end of the periodCash and balances with treasury banksBalances with other banks


Director - sd -

Director - sd -



Deposits and other account

Income tax paid

Unconsolidated Condensed Interim Statement of Changes in Equity (Un-audited)For the half year ended June 30, 2018

Balance as at January 01, 2017 - as restatedTransfer to General reserve:Total comprehensive income for the half year

ended June 30, 2017Net pro�t for the half year ended June 30, 2017Other comprehensive income related to equity

(Rupees in thousand)Revenue Reserves

10

12,602,602

-

-

--

Sharecapital

1,5581,558

93,511

-

-

Exchangetranslation

reserve

234,669

-

-

--

Sharepremiumaccount

6,755,314

-

-

--

Statutoryreserve

1,587,1923,976,548

---

Generalreserve

25,249,836-

3,027,615(88,039)

2,939,576

Total

3,976,548 (3,976,548)

3,027,615(89,597)

2,938,018

Unappropriated pro�t

Transfer to Statutory reserve

Balance as at June 30, 2017Total comprehensive income for the half year

ended December 31, 2017Net pro�t for the half year ended December 31, 2017Other comprehensive income related to equity


Transaction with owners, recorded directly in equityInterim dividend 2017: Re. 1 per shareBalance as at December 31, 2017Transfer to General reserveTotal comprehensive income for the half year

ended June 30, 2018


Balance as at June 30, 2018


-

12,602,602

----

-12,602,602

-

----

12,602,602-

-

95,069

-28,77828,778

-

-123,847

-

-76,23576,235

-

200,082-

-

234,669

--- -

-234,669

-

----

234,669-

605,523

7,360,837

--

- 448,054

-

7,808,891-

---

504,324

8,313,215-

-

3,673,350

--

--

3,673,3502,849,878

----

6,523,228

-

-

-

26,299,022

2,240,2724,379

2,244,651

-

-

(1,260,260)27,293,237

-

2,521,61993,928

2,615,547

30,014,066105,282

(605,523)

2,332,495

2,240,272 (24,399) 2,215,873

(1,260,260)

(448,054)

2,849,878(2,849,878)

2,521,61917,693

2,539,312 (504,324)

2,140,270105,282

Net pro�t for the half year ended June 30, 2018Other comprehensive income related to equity

Balance as at January 01, 2017

Effect of retrospective change in accounting policy12,602,602 93,511 234,669 6,755,314 1,587,192 25,357,4944,084,206

with respect to accounting for surplus on revaluation- - - - - (107,658) (107,658)

- as previously reported

of �xed assets

Transaction with owners, recorded directly in equityFinal dividend 2016: Rs. 1.5 per share - - - - -(1,890,390) (1,890,390)

Transfer from surplus on revaluation of assets tounappropriated pro�t - - - - - 9,8249,824

Transfer from surplus on revaluation of assets tounappropriated pro�t


Director - sd -

Director - sd -



Notes to the Unconsolidated Condensed Interim Financial Statements (Un-audited)For the half year ended June 30, 2018

11

1. STATUS AND NATURE OF BUSINESS

Askari Bank Limited (the Bank) was incorporated in Pakistan on October 9, 1991 as a Public Limited Company and is listed on the Pakistan Stock Exchange. The registered office of the Bank is situated at AWT Plaza, the Mall, Rawalpindi. The Bank is a scheduled commercial bank and is principally engaged in the business of banking as de�ned in the Banking Companies Ordinance, 1962. The Fauji Consortium: comprising of Fauji Foundation (FF), Fauji Fertilizer Company Limited (FFCL) and Fauji Fertilizer Bin Qasim Limited (FFBL) collectively owned 71.91 percent shares of the Bank as on June 30, 2018. The ultimate parent of the Bank is Fauji Foundation. The Bank has 516 branches (December 31, 2017: 516 branches); 515 in Pakistan and Azad Jammu and Kashmir, including 91 (December 31, 2017: 91) Islamic Banking branches, 43 (December 31, 2017: 43) sub-branches and a Wholesale Bank Branch in the Kingdom of Bahrain.

2. BASIS OF MEASUREMENT

These unconsolidated condensed interim �nancial statements have been prepared under the historical cost convention as modi�ed for certain investments which are carried at fair value, non-banking assets acquired in satisfaction of claims, freehold and leasehold land which are shown at revalued amounts and staff retirement gratuity and compensated absences which are carried at present value of de�ned bene�t obligations net of fair value of plan assets.

3. STATEMENT OF COMPLIANCE

These unconsolidated condensed interim �nancial statements for the half year ended June 30, 2018 are un-audited and have been prepared in accordance with the requirements of the International Accounting Standard 34, 'Interim Financial Reporting', and the requirements of the Companies Act, 2017, the Banking Companies Ordinance, 1962 and the provisions of and directives issued by the State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan (SECP). In case the requirements differ, the provisions of and directives issued under the Companies Act, 2017 and the Banking Companies Ordinance, 1962 and the directives issued by SBP shall prevail.

SBP vide BSD Circular No. 10 dated August 26, 2002 has deferred the applicability of International Accounting Standard 39, 'Financial Instrument: Recognition and Measurement' (IAS 39) and International Accounting Standard 40, 'Investment Property' (IAS 40), for banking companies till further instructions. Further, according to the noti�cation of SECP dated April 28, 2008, the International Financial Reporting Standard 7, 'Financial Instruments: Disclosures' (IFRS 7), has not been made applicable for banks. However, investments have been classi�ed and valued in accordance with the requirements of various circulars issued by SBP.

4. BASIS OF PRESENTATION

These unconsolidated condensed interim �nancial statements have been presented in accordance with the requirements of format prescribed by the State Bank of Pakistan vide BSD circular letter no. 2 dated May 12, 2004 and International Accounting Standard 34, 'Interim Financial Reporting' (IAS 34) and do not include all the information as required in the annual �nancial statements. Accordingly, these unconsolidated condensed interim �nancial statements should be read in conjunction with the unconsolidated �nancial statements of the Bank for the year ended December 31, 2017.

These unconsolidated condensed interim �nancial statements are separate �nancial statements of the Bank in which the investment in subsidiaries are stated at cost and have not been accounted for on the basis of reported results and net assets of the investees which is done in consolidated condensed interim �nancial statements.


12

In accordance with the directives of the Federal Government regarding shifting of the banking system to Islamic modes, SBP has issued various circulars from time to time. One permissible form of trade-related modes of �nancing comprises of purchase of goods by the Bank from its customers and resale to them at appropriate mark-up in price on deferred payment basis. The purchases and sales arising under these arrangements are not re�ected in these unconsolidated condensed interim �nancial statements as such but are restricted to the amount of facility actually utilized and the appropriate portion of mark-up thereon.

The �nancial results of the Islamic banking branches have been consolidated in these unconsolidated condensed interim �nancial statements for reporting purposes, after eliminating material inter branch transactions / balances. Key �gures of the Islamic banking branches are disclosed in Annexure to these unconsolidated condensed interim �nancial statements.

These unconsolidated condensed interim �nancial statements are presented in Pak Rupee which is the Bank's functional and presentation currency. Figures have been rounded off to the nearest thousand of rupees unless otherwise stated.

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies and methods of computation adopted in the preparation of these unconsolidated condensed interim �nancial statements are the same as those applied in the preparation of the unconsolidated �nancial statements of the Bank for the year ended December 31, 2017 except for the following:

Consequent to the enactment of the Companies Act, 2017 (the Act), the Bank has changed its accounting policy for treatment of de�cit on revaluation of �xed assets wherein any decrease in carrying amount of �xed asset as a result of revaluation is charged to pro�t and loss account, however the decrease shall be recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of that asset. Previously, any decrease in the carrying amount of �xed assets was netted off against surplus on revaluation of any other �xed assets. Had the accounting policy not been changed, the surplus on revaluation of �xed assets would have been lower by Rs. 107,658 thousand and unappropriated pro�t would have been higher by the same amount. The change in accounting policy has been accounted for retrospectively and the corresponding �gures have been restated. Since the impact of the above change in accounting policy is considered immaterial, the Bank has not presented the third statement of �nancial position for the year prior to last year. The effect of the restatement has been disclosed in note 15.2 to these unconsolidated condensed interim �nancial statements.

Amendments and interpretations to approved accounting standards effective from January 1, 2018 are not expected to have a material impact on these unconsolidated condensed interim �nancial statements.

6. ACCOUNTING ESTIMATES

The basis for accounting estimates adopted in the preparation of these unconsolidated condensed interim �nancial statements are the same as those applied in the preparation of the unconsolidated �nancial statements of the Bank for the year ended December 31, 2017.

7. FINANCIAL RISK MANAGEMENT

The �nancial risk management objective and policies adopted by the Bank are consistent with those disclosed in the unconsolidated �nancial statements of the Bank for the year ended December 31, 2017.


8. INVESTMENTS

Investments by types:

(Rupees in thousand)

Held by Given as Total

the Bank collateral

101,156,523 28,801,009 129,957,53217,556,510

----

-

TotalHeld bythe Bank

Given ascollateral

119,415,130 33,005,213 152,420,343112,799,616 2,625,524

4,757,813 -1,275,794 -

27,314 -4,649,279 -

14,105,138 627,665

Held to maturity securitiesGovernment of Pakistan Euro BondsSukuk Certi�cates

Investments at cost

Provision for diminution in the value of investmentsInvestments - net of provisions(De�cit) / surplus on revaluation of

available for sale securities - netTotal investments

-46,357,519

1,318,629 1,706,2222,294,387

1,054,2083,613,016

2,760,430267,280,322 49,117,949

(2,042,279) - (2,042,279)265,238,043 49,117,949 314,355,992

399,719 201,037 600,756265,637,762 49,318,986 314,956,748

931,029 -258,350,393 36,508,291

1,003,396 2,304,3103,513,615 1,804,0464,517,011 4,108,356

262,867,404 40,616,647

(2,205,345) - (2,205,345)260,662,059 40,616,647 301,278,706

(1,502,753) (19,759) (1,522,512)259,159,306 40,596,888 299,756,194

13

Available for sale securitiesMarket Treasury BillsPakistan Investment BondsFully paid ordinary shares / unitsUnits of open end mutual fundsFully paid preference sharesTerm Finance Certi�catesSukuk Certi�cates

Government of Pakistan Euro Bonds

Commercial PapersForeign Government Bonds

--

389,280 -- 249,889

294,858,684

115,425,1404,757,8131,275,794

27,3144,649,279

14,732,803

931,029

389,280249,889

263,667,306

136,643,7654,546,8511,600,876

27,3145,747,142

12,768,137

573,033

375,075228,590

310,024,825

154,200,2754,546,8511,600,876

27,3145,747,142

12,768,137

573,033

375,075228,590

3,307,7065,317,6618,625,367

303,484,051

3,024,8513,348,5956,373,446

316,398,271

9. ADVANCESLoans, cash credits, running �nances, etc.

In PakistanOutside Pakistan

Islamic �nancing and related assets - note A - 1 of AnnexureNet investment in �nance lease - In PakistanBills discounted and purchased (excluding treasury bills)

Payable in Pakistan Payable outside Pakistan

Advances - grossProvision for non-performing advances - note 9.1

Speci�c provisionGeneral provisionGeneral provision against consumer loans

Advances - net of provision

(Audited)

December 31,2017

223,766,6457,688,190

231,454,83534,755,797

8,652,030

3,516,0945,960,9149,477,008

284,339,670

(24,962,069)(236,940)(447,575)

(25,646,584)258,693,086


2018

263,892,5257,011,271

270,903,796

43,991,1428,427,076

6,703,7297,589,973

14,293,702337,615,716

(24,368,173)(287,596)(508,984)

(25,164,753)312,450,963


December 31, 2017 - (Audited)June 30, 2018 - (Un-audited)


14

9.1 Particulars of provision against non-performing advances


June 30, 2018 - (Un - audited)Consumer

Financing -General

Total

25,646,5841,088,694

(1,570,525)

25,164,753

447,57561,409

-

508,984

General

236,94051,389

(733)

287,596

Speci�c

24,962,069975,896

(1,569,792)

24,368,173

December 31, 2017- (Audited)

Total

26,959,3341,018,822

(2,208,355)

25,646,584

ConsumerFinancing - General

368,59990,267

(11,291)

447,575

General

236,94437,450

(37,454)

236,940

Speci�c

26,353,791891,105

(2,159,610)

24,962,069

(481,831)61,40950,656(593,896) (1,189,533) 78,976 (4) (1,268,505)

9.2 The net Forced Sale Value (FSV) bene�t already availed has been reduced by Rs. 82,934 thousand, which has resulted in an increased charge for speci�c provision for the period by the same amount. Had the FSV bene�t not reduced, before and after tax pro�t for the period would have been higher by Rs. 82,934 thousand (2017: Rs. 219,497 thousand) and Rs. 53,907 thousand (2017: Rs. 142,673 thousand) respectively. Further, at June 30, 2018, cumulative net of tax bene�t of FSV is Rs. 666,296 thousand (December 31, 2017: Rs. 720,203 thousand) under BSD circular No. 1 of 2011 dated October 21, 2011. Reserves and un-appropriated pro�t to that extent are not available for payment of cash or stock dividend.

9.3 The Bank has availed the relaxation of Rs. 102,460 thousand (December 31, 2017: Rs. 102,460 thousand) allowed by the SBP for maintaining provisions as per time based criteria of Prudential Regulations.

9.4 Advances include Rs. 26,519,585 thousand (December 31, 2017: Rs. 26,753,027 thousand) which have been placed under non-performing status as detailed below:

---- (123,217)--(123,217)

Opening balanceCharge for the period / yearReversal for the period / yearNet (reversal) / charge for the period / year

Closing balance

Amounts charged off - agri loans

Category of classi�cation

December 31, 2017 - (Audited)Classi�ed Advances Provision Provision

Domestic Overseas Total Required Held(Rupees in thousand)

June 30, 2018 - (Un-audited)Classi�ed Advances Provision Provision


137,409 - - -137,409118,878 - 15,600701,369 - 280,067

25,795,371 - 24,666,40226,753,027 - 24,962,069

118,878701,369

25,795,37126,753,027

15,600280,067

24,666,40224,962,069

140,122 - - -140,122553,490 - 107,316931,893 - 434,020

24,894,080 - 23,826,83726,519,585 - 24,368,173

553,490931,893

24,894,08026,519,585

107,316434,020

23,826,83724,368,173


Other Assets Especially


SubstandardDoubtfulLoss


Mentioned - note 9.4.1


9.4.1 This represents classi�cation made for Agricultural, Mortgage and Small Entities �nances.

Note

10. OPERATING FIXED ASSETS

10.1

Provision against operating �xed assets

Capital work-in-progressProperty and equipmentIntangibles 10.2

10.1 Property and equipmentBook value at beginning of the period / yearCost of additions / revaluation during the period / yearBook value of deletions / transfers during the period / yearDepreciation charge for the period / yearBook value of adjustments during the period / yearBook value at end of the period / year




2017

160,6369,764,664

827,93110,592,595

(24,404)10,728,827

9,851,6691,260,980

(22,131)(1,326,435)

5815129,764,664


2018

157,8009,622,447

737,13210,359,579

(24,404)10,492,975

9,764,664378,569(11,538)

(509,760)

9,622,447

15

10.2 IntangiblesBook value at beginning of the period / yearCost of additions during the period / yearAmortization charge for the period / yearBook value at end of the period / year

922,212102,195

827,9317,034

(196,476)827,931

(97,833)737,132

11. DEFERRED TAX ASSETS

(354,053)

-

71,2781,213,954

532,879155,740

1,902,573

(375,702)

450,177

71,278145,753

(210,265)165,267100,755

Deferred (credits) / debits arising due to:Accelerated tax depreciation and amortizationProvision against non-performing advances

- excess of 1% of total advances

- classified in sub-standard category

Surplus on revaluation of available for sale securitiesActuarial losses

- prior year charge on NPLs disallowance - note 11.1 1,496,729 -

11.1 This represents deferred tax on provision for NPLs classi�ed prior to enactment of the seventh schedule of Income Tax ordinance 2001 which NPLs are disallowed consequent to the order of Islamabad High Court through its order dated March 13, 2018.

16


13. DEPOSITS AND OTHER ACCOUNTSCustomers

Financial institutions

Fixed depositsSavings depositsCurrent accounts - remunerativeCurrent accounts - non-remunerativeSpecial exporters' accountMargin accountsOthers

Remunerative depositsNon-Remunerative deposits

81,535,107291,527,935

751,535143,681,714

150,6363,514,7471,163,372

2,817,279665,983

525,808,308

86,351,668

315,504,565

604,716

162,911,945

181,444

3,286,9191,271,543

2,654,714419,107

573,186,621

14. SUB-ORDINATED LOANS

Term �nance certi�cates - IVTerm �nance certi�cates - VTerm �nance certi�cates - VI (ADT - 1) - note 14.1

997,6003,995,200

-

-3,994,4005,505,000

12. BORROWINGS

12,029,46110,891,099 4,673,546

16,838,601

40,522,9458,622,609

49,145,554

5,599,68871,583,843

3,46871,587,311

5,164,799

16,299,924

25,703,54813,189,36838,892,916

9,085,66564,278,505

1,899,63766,178,142

In Pakistan - local currency

Repo borrowings

Unsecured

Outside Pakistan - foreign currencies

- State Bank of Pakistan- Financial Institutions

- Call borrowings

- Overdrawn nostro accounts - unsecured

Borrowings from the State Bank of Pakistan: - Export re�nance scheme - Long term �nancing facility - Financing facility for storage of agricultural produce

Secured

- Renewable energy �nancing facility9,167

126,4277,500

236,526



2017


2018

4,992,8009,499,400

14.1 This represents amount received upto June 30, 2018 against issuance of term �nance certi�cates (TFC VI - ADT 1) of Rs. 6 billion issued on July 3, 2018 and is admissible against tier 1 capital of the Bank as at June 30, 2018 as approved by SBP through its letter dated July 26, 2018.

17


15. SURPLUS ON REVALUATION OF ASSETS - NET OF TAXSurplus on revaluation of:

Related deferred tax

i) Federal Government securitiesii) Listed sharesiii) Units of open end mutual fundsiv) Other securities

Operating �xed assetsNon banking assets acquired in satisfaction of claims - note 15.1Available for sale investments

1,503,492(981,249)

51,25927,254

600,756(210,265)390,491

5,142,254

2,940,1281,811,635

(1,109,617)(470,805)

61,126(3,216)

(1,522,512)532,879

(989,633)3,655,942

2,940,1281,705,447



2017


2018Restated

15.1 Non-banking assets acquired in satisfaction of claims

Surplus on revaluation as at begining of the period / year 1,617,8601,811,635Recognised during the period / year 203,599-Realised on disposal during the period / year (3,278)(103,662)Transferred to unappropriated pro�t in respect of incremental

depreciation charged during the period / year (6,546)(1,620)

Surplus on revaluation as at end of the period / year 1,811,6351,705,447Adjustment during the period -(906)

15.2 Prior period effect of change in accounting policy for revaluation of operating �xed assets

The effect of restatement consequent to change in accounting policy as stated in note 5 to these unconsolidated condensed interim �nancial statements is summarized below:

Statement of Financial Position

Increase in surplus on revaluation of operating �xed assetsDecrease in unappropriated pro�t at year end



2016Restated


2017Restated

107,658107,658

107,658107,658

16. CONTINGENCIES AND COMMITMENTS

16.1 Direct credit substitutes

ii)i) Government

Others 10,884,649416,852

11,301,5016,002,4933,418,614

9,421,107



2017


2018

18




2017


201816.2 Transaction-related contingent liabilities

Money for which the Bank is contingently liable:Contingent liability in respect of guarantees given on behalf of directors or officers or any of them (severally or jointly) with any other person, subsidiaries and associated undertakings

Contingent liability in respect of guarantees given, favouring:i) Governmentii) Banks and other �nancial institutionsiii) Others

671,079

101,289,688

8,480,982

31,580,906141,351,576142,022,655

1,058,218

137,189,655

612,44327,213,245

165,015,343166,073,561

These include guarantees amounting to Rs. 1,526,647 thousand (December 31, 2017: Rs. 1,564,564 thousand) against which the Bank is contesting court proceedings and these are not likely to result in any liability against the Bank.

16.3 Trade-related contingent liabilities

16.4 Other Contingencies


916,105


2018

211,032,705

778,013


2017

173,128,678

These represent certain claims by third parties against the Bank, which are being contested in the Courts of law. The management is of the view that these relate to the normal course of business and are not likely to result in any liability against the Bank

The Bank makes commitments to extend credit in the normal course of its business but these being revocable commitments do not attract any signi�cant penalty or expense if the facility is unilaterally withdrawn except for

16.5 Commitments in respect of forward lendingCommitment against "Repo" transactions

Purchase and resale agreementsSale and repurchase agreements

16.7 Commitments in respect of forward exchange contractsPurchaseSale

The above commitments have maturities falling within one year

16.8 Commitments for acquisition of operating �xed assets16.9 Commitments to extend credit

1,515,75249,250,012

26,354,4789,083,720

119,195

14,826,508

4,513,68338,960,558

28,579,9509,855,026

70,156

15,242,908

16.6 Commitments in respect of forward RepoForward sale and repurchase agreements - 5,000,000

19


16.10 Other commitmentsThis represents participation in the equity of Pakistan Mortgage Re�nance Company Limited

16.11 Bills For CollectionPayable in PakistanPayable outside Pakistan

281,640

4,502,30615,768,12020,270,426

-

4,368,41220,713,39425,081,806

The Bank has �led tax returns for and up to tax year 2017 (year ended 31 December 2016). The assessments for and up to tax year 2017 were amended by the tax authorities mainly in the matters of admissibility of provisions against doubtful debts and diminution in the value of investments, bad debts written off, apportionment of expenses to income exempt from tax or taxable at a lower rate and basis of taxation of commission and brokerage income.

Tax payments made in relation to the matters currently pending are being carried forward as receivable, as management is con�dent of their realization as and when the appeals are decided.

Consequent upon the amalgamation with and into the Bank, the outstanding tax issues relating to Askari Leasing Limited (ALL) are as follows:

Tax returns of ALL have been �led for and up to tax year 2010. The returns for the tax years 2003 to 2010 were amended by the tax authorities mainly in the matter of admissibility of initial allowance claimed on leased vehicles. On appeals �led by ALL, partial relief was provided by the CIR(A) by allowing initial allowance on commercial vehicles. Re-assessment has not yet been carried out by the tax department. A tax demand is however not likely to arise after re-assessment.

For and up to the assessment years 2002-2003, reference applications �led by the tax authorities in the matter of computation of lease income are pending decisions by the High Court. However the likelihood of an adverse decision is considered low due to a favourable decision of the High Court in a parallel case.



2017


2018

17. TAX STATUS

(i)

(ii)

18. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of traded investments is based on quoted market prices, except for securities classi�ed by the Bank as ‘held to maturity’. Securities classi�ed as held to maturity are carried at amortized cost. Fair value of unquoted equity investments is determined on the basis of break up value of these investments as per the latest available audited �nancial statements.

20


Fair value of �xed term loans, other assets, other liabilities and �xed term deposits cannot be calculated with sufficient reliability due to the absence of current and active market for such assets and liabilities and reliable data regarding market rates for similar instruments. The provision for impairment of loans and advances has been calculated in accordance with the Bank’s accounting policy as stated in note 5 to annual �nancial statements.

Fair value of remaining �nancial assets and liabilities except �xed term loans, staff loans, non-performing advances and �xed term deposits is not signi�cantly different from the carrying amounts since assets and liabilities are either short term in nature or are frequently repriced in the case of customer loans and deposits.

The Bank measures fair values using the following fair value hierarchy that re�ects the signi�cance of the inputs used in making the measurements:

Level 1: Fair value measurements using quoted prices (unadjusted) in active markets (Pakistan Stock Exchange) for identical assets or liabilities.

Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) available at MUFAP, Reuters page, Redemption prices.

Level 3: Fair value measurements using input for the asset or liability that are not based on observable market data (i.e. unobservable inputs) and determined by valuers on the panel of Pakistan Bank's Association.

The table below analyses the �nancial and non-�nancial assets carried at fair values, by valuation methods. Valuation of investments is carried out as per guidelines speci�ed by the SBP. In case of non-�nancial assets, the Bank has adopted revaluation model (as per IAS 16) in respect of land and non-banking assets acquired in satisfaction of claims.

June 30, 2018 - (Un-audited)

- 152,402,884 -- 114,420,625

3,454,680-

66,720236,017497,840

-4,255,257 286,296,290

--

689,280

-300,000

----

-

389,280-

Level 1 Level 2 Level 3

-1,336,920

-3,336,008

13,662,305-

238,438899,110

Financial assets:Available for sale securities

Market Treasury BillsPakistan Investment BondsFully paid ordinary shares / unitsUnits of open end mutual fundsFully paid preference sharesTerm Finance Certi�catesSukuk Certi�cates



Non-�nancial assets:Operating �xed assets

Property and equipment (freehold and leasehold land)Other assets

Non-banking assets acquired in satisfaction of claims - --

5,096,3179,993,702-

- - 4,897,385



21





Non-banking assets acquired in satisfaction of claims


- 129,956,900 -- 155,714,864

3,384,942-

66,720703,899575,400

-18,360

----


-1,652,135

-3,770,651

11,674,521

-4,730,961 303,568,906 393,435

-571,409

- --

5,001,5719,791,298-

- - 4,789,727

Financial assets:(Rupees in thousand)


--

375,075-

-228,426

The Bank’s policy is to recognise transfers into and out of the different fair value hierarchy levels at the date the event or change in circumstances that caused such transfer takes place. There were no transfers between levels 1 and 2 during the period.


Total income Total expensesNet income

Total income Total expensesNet income

Segment Assets (Gross)Segment Non Performing LoansSegment Provision RequiredSegment Liabilities

Total

Segment return on net assets (%)Segment cost of funds (%)

CorporateFinance

Trading andSales

Retail Banking

Commercial Banking

Payment andSettlement

AgencyServices

For the half year ended June 30, 2017 - (Un-audited)

21,128,87916,096,311

5,032,568

145,89415,655

130,239

10,719,0448,966,6241,752,420

779,587770,103

9,484

9,366,7346,331,3083,035,426

92,2329,897

82,335

25,3882,724

22,664

For the half year ended June 30, 2018 - (Un-audited)22,048,30617,660,452

4,387,854

87,2878,131

79,156

9,657,2328,712,289

944,943

1,057,099885,820171,279

11,132,9538,043,6173,089,336

82,8107,714

75,096

30,9252,881

28,044

733,466,86226,519,58527,850,417

671,946,437

94,094--

1,0780.010.00

347,397,246-

1,228,46836,553,061

1.421.34

20,842,1152,138,1052,464,333

309,1810.160.14

365,010,80224,381,48024,157,616

635,081,7131.631.24

89,268--

1,0220.010.00

33,337--

3820.000.00

As at June 30, 2018 - (Un-audited)

19. SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIESThe segment analysis with respect to business activity is as follows:-


20. RELATED PARTY TRANSACTIONS

Fauji Consortium comprising of Fauji Foundation, Fauji Fertilizer Company Limited and Fauji Fertilizer Bin Qasim Limited ("the Parent") holds 71.91% (December 31, 2017: 71.91%) of the Bank's share capital at the period end. The Bank has related party relationships with entities under common directorship, its directors, key management personnel and their relatives, entities over which the directors are able to exercise signi�cant in�uence and employees' funds.Banking transactions with the related parties are executed substantially on the same terms, including mark-up rates and collateral, as those prevailing at the time for comparable transactions with unrelated parties and do not involve more than normal risk (i.e. under the comparable uncontrolled price method) other than those under terms of employment.

22

Segment Assets (Gross)Segment Non Performing LoansSegment Provision RequiredSegment LiabilitiesSegment return on net assets (%)Segment cost of funds (%)

657,979,01927,302,67728,266,757

596,206,298

160,534--

1,997

0.020.00

322,608,147-

29,033,9101.721.52

17,383,2282,249,0842,398,724

284,6600.120.13

317,697,68725,053,59324,408,158

566,884,1201.501.07

101,487--

1,2630.010.00

27,936--

3480.000.00


1,459,875


23

Balances outstanding as at - Advances

liabilities for irrevocable commitments and contingencies

- Investments in shares / units

- Security deposits payable

Transactions during the half year ended- Mark-up / interest earned- Net mark-up / interest expensed- Contributions to employees' funds

- Rent of property / service charges paid

- Remuneration and allowances paid- Post employment bene�ts


SecuredUn-secured

- Mark-up receivable

In addition to above, rent free sub-branch is operating at FFC head office, Sona Tower.

23. DATE OF AUTHORISATION

These unconsolidated condensed interim �nancial statements were authorized for issue by the Board of Directors on August 16, 2018.

December 31, 2017 - (Audited)




- Fee, commission and brokerage income- Fee, commission and brokerage paid

- Assets held for sale - net of provision- Contribution payable to employees' funds

Parent

5,674,098

20,193

-

494

16,928127,407

-10,169

--

781,073--

50,000

40-

--

Key management

personnel

160,366

-

-

504

5,6142,736

--

216,60514,691

390,8476,408

56,346

1,515

--

--

Directors

27,047

--

-

- 237

--

--

-695

-

18

--

--

Companies with common directorship, having equity

under 20%

6,452,719

1,878,456162,561

59,772

144,749196,519

--

--

3,797,303-

27,229

11,038

1,249 46

--

3,251

-

-

-

- 144

--

--

---

-

--

80,720-

OtherRelatedParties

3,042,573

--

-

- 47,551

275,571-

1,981-

---

6,513

--

-489,526

Parent

10,847,876

3,234,242-

494

23,317274,560

-10,141

--

4,109,199-

10,216

22,080

42-

--

Key management

personnel

111,722

-

-

287

6,2532,602

--

223,59112,268

360,7578,539

58,638

1,886

--

--

Directors

9,837

--

-

47,000782

2,636

1,948206

--

--

31

--

--


under 20%

4,519,959

1,332,131466,472

114,048

4,099,549-

71,257

148,756269,636

--

--

17,714

10,697236

--

Subsidiary

14,273

-

-

-

---

----

--

-

--

80,720-

OtherRelatedParties

4,101,765

--

-

-93,046

253,938-

2,040-

4,267

---

--

-94,338

- Deposits - in local currency

- Mark-up payable - in local currency

- Outstanding commitments and contingent

Details of transactions with related parties during the half year and balances as at June 30, 2018, are as follows:

96,617 26,222 1,954 757,299 - -195,007 33,048 1,349 794,737 - -- Deposits - in foreign currencies- - - 24,975 - -- - - 24,965 - -- Sub-ordinated loans

458 77 2 5,560 - -246 56 - 3,064 - -- Mark-up payable - in foreign currencies

- Security deposits receivable 3,600 - - - - -3,600 - - - - -

- Dividend received - - - - - -- - - 4,132 - -

21. Basel III Liquidity Standards

Liquidity Coverage Ratio (Monthly Average)Net Stable Funding Ratio

184.74%220.45%


2017196.33%209.83%

(Un-audited)March 31,

2018

22. RECLASSIFICATION OF COMPARATIVE FIGURES

There has been no signi�cant reclassi�cation in these unconsolidated condensed interim �nancial statements except an amount of Rs. 94,872 thousand for the period ended June 30, 2017, which has been reclassi�ed from other income to fee, commission and brokerage income.

Subsidiary

- Rent received - - - - - -- - - 749 - -

- Dividend paid- Fees and other expenses paid- Gain on sale of assets held for sale

1,359,423--

133250

-

22,388

-

- -

-

--

216,000

11,745--

---

---

-2,644

-

---

---

---

175.99%208.41%


2018


Director - sd -

Director - sd -



24

Islamic Banking Business - Statement of Financial PositionAnnexureAs at June 30, 2018

(1 of 4)


A - 1

Note

The Bank is operating 94 Islamic banking branches including 3 Sub branches at June 30, 2018 (December 31, 2017: 94 Islamic banking branches including 3 Sub branches).

December 31,2017

2,996,1031,162,958

750,000

6,733,697

34,395,936

654,384

(Audited)June 30,

2018

3,064,688

349,355-

6,631,35643,608,184

606,629

(Un-audited)

A - 2

A - 1.1

1,022,48247,715,560

775,7642,410,152

12,978,19817,205,872

5,824,785497,568

1,139,5544,797

1,868,0601,519,444

44,224,1943,491,366

4,100,000

4,968,6204,522,3398,606,6778,678,5605,498,419

110,56934,755,797

2,370,613

(359,861)34,395,936

1,290,93455,551,146

994,353

6,090,768

14,364,73618,651,941

6,153,666577,177845,646

3,8872,618,0601,727,192

52,027,4263,523,720

4,100,000

4,605,1364,585,916

17,279,9328,587,1235,634,072

458,82643,991,142

ASSETSCash and balances with treasury banksBalances with other banksDue from �nancial institutionsInvestmentsIslamic �nancing and related assetsOperating �xed assetsOther assetsTotal Assets

LIABILITIESBills payableDue to Financial InstitutionsDeposits and other accounts

-Current Accounts-Saving Accounts-Term Deposits-Others-Deposit from Financial Institutions - remunerative-Deposits from Financial Institutions - non-remunerative

Due to Head OfficeOther liabilities

Net AssetsREPRESENTED BYIslamic Banking FundAccumulated losses

(De�cit) / surplus on revaluation of assets

Remuneration to Shariah Board during the period / year

(616,817)3,483,183

8,183

3,491,366

3,965

(535,709)3,564,291

(40,571)3,523,720

2,040

2,840,137

(382,958)43,608,184

A - 1 Islamic Financing and Related AssetsMurabahaIjaraMusharakaDiminishing MusharakaSalam

Other Islamic ModesIstisna

Total provision

25

A - 1.1 Islamic Mode of Financing

Financing

Inventory

Total

Advance

Provision


December 31, 2017 - (Audited)

Murabaha Ijara Musharaka DiminishingMusharaka

Salam Istisna OtherIslamicModes

Total

3,724,9731,243,647

-

(79,392)4,968,620

4,889,228

4,175,959346,380

-

(128,984)4,522,339

4,393,355

8,606,677 -

-

-8,606,677

8,606,677

8,625,354 53,206

-

(142,918)8,678,560

8,535,642

5,394,534 -

103,885

(8,567)5,498,419

5,489,852

2,062,034 -

308,579

-2,370,613

2,370,613

60,569 -

-

-110,569

110,569

32,650,1001,643,233

412,464

(359,861)34,755,797

34,395,936

Financing

Inventory

Total

Advance

Provision


Murabaha Ijara Musharaka DiminishingMusharaka

Salam Istisna OtherIslamicModes

Total

3,411,9671,193,169

(81,834)4,605,136

4,523,302

4,169,770416,146

(122,788)4,585,916

4,463,128

17,279,932 -

-17,279,932

17,279,932

8,532,04055,083

(165,958)8,587,123

8,421,165

4,920,144 -

(12,378)5,634,072

5,621,694

2,678,426 -

-2,840,137

2,840,137

64,271 -

-458,826

458,826

41,056,5501,664,398

- - - - 713,928 161,711 - 875,639

(382,958)43,991,142

43,608,184

A - 2 These include remunerative current accounts of Rs. 604,716 thousand (December 31, 2017: Rs.751,535 thousand).

Receivables against Sale of Salam / Istisna Inventory - - - - - - 394,555 394,555

- - - - - - 50,000 50,000

Annexure(2 of 4)

Receivables against Sale of Salam / Istisna Inventory

26

Islamic Banking Business - Pro�t and Loss Account (Un-audited)AnnexureFor the half year ended June 30, 2018

(3 of 4)


Pro�t / return earned on �nancings, investments and placementsReturn on deposits and other dues expensedNet spread earned

Provision against non-performing �nancingsProvison for diminution in the value of investments

Income after provisions

Other IncomeFee, commission and brokerage Income

June 30,2018

1,563,550693,697869,853

23,198

23,198

-

846,655

83,280

June 30,2017

1,236,224594,567641,657

49,00918,703

67,712573,945

52,029Income from dealing in foreign currencies 10,134 1,328Other incomeTotal other income

Other expenses

Administrative expensesOther provisions / write offsOther chargesTotal other expenses

Extraordinary / unusual itemsPro�t / (loss) before taxation

20,715

114,129

960,784

879,676

--

879,67681,108

-81,108

15,22468,581

642,526

821,342--

821,342 (178,816)

- (178,816)

27

Islamic Banking Business - Statement of Sources and Uses of Charity FundAnnexureAs at June 30, 2018

(4 of 4)


Opening balanceAdditions during the period / year

- received from customers on delayed payments- non shariah compliant income- pro�t on charity account

Payments / Utilization during the period / year- education- community welfare (provision of clean drinking water)

Closing balance

- health- orphanage

December 31,2017

9,257

9,255381

2

9,735

(2,250)(3,700)

(12,688)6,304

(4,684)(2,054)

(Audited)June 30,

2018

6,304

4,809224

-

5,057

-

10,361

(Un-audited)

- others 24 97

-

(1,000)-

(1,000)

CONSOLIDATED CONDENSED INTERIMFINANCIAL STATEMENTS (Un-Audited)

FOR THE HALF YEAR ENDED JUNE 30, 2018

ASKARI BANK LIMITED& ITS SUBSIDIARY

As at June 30, 2018

29

Note (Rupees in thousand)Assets

Balances with other banksLendings to �nancial institutionsInvestmentsAdvancesOperating �xed assets

Other assets

Assets attributable to discontinued operations

Cash and balances with treasury banks

89

1011

LiabilitiesBills payableBorrowings

1413

Deposits and other accounts15Sub-ordinated loans

Liabilities against assets subject to �nance leaseDeferred tax liabilitiesOther liabilities

Net Assets

Represented By:Share capitalReservesUnappropriated pro�t

Surplus on revaluation of assets - net of tax16

Contingencies and Commitments

The annexed notes 1 to 23 form an integral part of these consolidated condensed interim �nancial statements.

Non-controlling interest

44,239,3253,193,8352,250,000

314,956,748

258,693,08610,728,827

22,465,073

656,627,649

656,955,598

10,769,26271,587,311

525,805,0514,992,800

--

11,115,197

624,410,362

32,545,236

12,602,60212,032,263

2,703,88727,338,752

19,87732,545,236


2017

44,35327,383,105

51,028,9483,531,8204,481,150

299,756,194312,450,963

10,492,975

21,891,102

705,535,725

705,826,498

12,470,06066,178,142

573,185,3429,499,400

-

-

10,612,213

672,055,26433,771,234

12,602,60215,316,709

2,136,95230,056,263

Discontinued operations33,771,234


2018

43,40030,099,663

17

Consolidated Condensed Interim Statement of Financial Position

327,949290,77312

671,945,157Liabilities associated with discontinued operations

624,269,621140,741110,10712

5,142,254Continued operations15,629

3,655,942

Deferred tax assets 100,7551,902,573

Restated


Director - sd -

Director - sd -



30

Consolidated Condensed Interim Pro�t and Loss Account (Un-audited)For the half year ended June 30, 2018

Note

(1,062,486)

1,214,059170,585404,048

1,510,631

-176,809

3,476,132

7,404,438-

100,4907,504,928

946,439243,344815,170

2,004,953

7,835,000

8,897,486

12,373,618

4,868,690-

4,387,854-

4,868,690

2,863,737

(318,766)

1,471,360114,718943,945134,477

-263,312

2,927,812

7,703,608-

87,6207,791,228

8,932,504

9,251,270

12,179,082

4,387,854

2,521,619

(706,788)

639,116152,551225,343993,315

-147,759

2,158,084

3,874,932-

55,0703,930,002

189,033243,344909,800

1,342,177

4,040,749

4,747,537

6,905,621

2,975,619-

2,975,619

1,633,442

199,498

779,23577,320

619,93241,574

-172,918

1,690,979

3,888,195-

42,3873,930,5822,264,303

-

511,5241,700,489

(1,089,102)1,122,911

4,703,404

4,503,906

6,194,885

2,264,303

1,141,392

1,233,9471,700,489

(1,068,201)1,866,235


2018June 30,

2017

9.1

12


2018June 30,

2017

19,120,49410,187,990

17,641,2479,806,247

9,987,1335,283,729

8,977,5384,936,789

(481,831)-

163,065-

(1,069,513)30,047

(23,020)-

(91,078)-

290,576-

(715,018)18,749

(10,519)-




Profit after taxation - continued operations

Attributable to:

Reversal of provision against non-performing loans and advances - net

Provision / (reversal of provision) for diminution in the


Bad debts written off directly






The annexed notes 1 to 23 form an integral part of these consolidated condensed interim financialstatements.

value of investments - net

31,148(4,271) 18,541(1,360)Profit after taxation - discontinued operations2,894,8852,517,348 1,651,9831,140,032

2,886,6682,518,301 1,648,6261,140,228Equity holders of the Bank8,217(953) 3,357(196)Non-controlling interest

2,894,8852,517,348 1,651,9831,140,032




Other income

Non mark-up / interest expencesAdministrative expensesOther provisions / write offsOther charges




Director - sd -

Director - sd -



31

Consolidated Condensed Interim Statement of Comprehensive Income (Un-audited)For the half year ended June 30, 2018

2,894,885

1,558

1,140,032

75,072

1,651,983

70

June 30,2017


2018June 30,

2017


2018

2,517,348

76,235

Other comprehensive incomeItems that are or may be reclassified subsequently to

profit and loss account Exchange difference on translation of net investment in Wholesale Bank Branch


Items that will not be reclassified to profit andloss account

(89,597) 17,693

(137,842)48,245

27,220(9,527)

(137,842)48,245

(89,597)

2,806,846

(120,172)

1,232,797

(517,807)

1,562,456

(553,229)

17,693

2,611,276

(1,380,124)

27,220(9,527)

2,664,601 705,116 1,009,2271,226,904

Remeasurement of defined benefit planRelated tax on remeasurement of defined benefit plan

Remeasurement of defined benefit plan - net of tax

Comprehensive income - transferred to statement of changes in equity

in equity

Total comprehensive income

Items that are or may be reclassified subsequently to profit and loss account

Deficit on revaluation of available for sale securities - net of tax

The annexed notes 1 to 23 form an integral part of these consolidated condensed interim financialstatements.

Remeasurement of defined benefit plan -- - --(Discontinued operations) - net of tax

Continued operations(22,073) (9,874) -(4,248)Discontinued operations

2,662,123 707,879 1,006,6991,228,961Total comprehensive income attributable to:

Equity holders of the Bank2,478 (2,763) 2,528(2,057)Non-controlling interest

2,664,601 705,116 1,009,2271,226,904

2,655,526 716,350 993,8761,235,423Total comprehensive income arises from:

Continued operations9,075 (11,234) 15,351(8,519)Discontinued operations

2,664,601 705,116 1,009,2271,226,904


Director - sd -

Director - sd -



Components of comprehensive income not reflected

32

Consolidated Condensed Interim Cash Flow Statement (Un-audited)


June 30, 2018

607,593(481,831)

-163,065176,889

(2,981,150)(53,371,698)

567,041(55,785,807)

1,700,798(5,409,169)47,380,291

(152,622)43,519,298

(7,489,403)

(2,812,049)(10,790,978)

15,166,141(2,251,921)

94,007(383,279)

12,596,255

4,506,600(10,504)

466,7624,739,898

June 30, 2017

4,868,690(170,585)

926,028(1,069,513)

30,047(23,020)147,826

6,316,319(25,351,081)

582,291(18,452,471)

2,307,507(46,320,262)53,141,708

(136,238)8,992,715

(4,748,612)

(2,252,412)(7,351,908)

13,348,9221,285

86,261(723,246)

13,066,621

(1,000)(1,867,550)

14,4584,712,563

4,387,854(114,718)

4,273,136 4,698,105

Provision / (reversal of provision) for diminution in the value of investments - net Impairment loss on available for sale investments

Charge for defined benefit plan

Reversal of provision against non-performing advances - netDepreciation / amortization

(Increase) / decrease in operating assets

Net cash outflow from operating activities

Net cash inflow from investing activities

Sale proceeds of operating fixed assets disposed off

Cash generated from operations

Dividend income

4,496,09676,235

(1,868,550)1,558Exchange difference on translation of net investment in Wholesale Bank Branch

47,661,5664,600,044

51,028,9483,531,820

52,261,61054,560,768

6,377,60848,183,16054,560,768

3,847,72148,413,88952,261,610

Increase in cash and cash equivalents

Less: dividend income

Investments in operating fixed assets - net of adjustment

1,046 3,090Loss on sale of operating fixed assets

(489,526) (350,884)Payment made to defined benefit plan

10,492 12,031

Payments of sub-ordinated loansDividends paidNet cash inflow / (outflow) from financing activities

Adjustments:

For the half year ended June 30, 2018

37,208 (1,419)Discontinued operations

Cash flow from operating activitiesProfit before taxation

Lendings to financial institutionsAdvancesOther assets (excluding advance taxation)

Increase / (decrease) in operating liabilitiesBills payableBorrowingsDeposits and other accountsOther liabilities (excluding current taxation)

Cash flow from investing activities

Net investments in held to maturity securitiesNet investments in available for sale securities

Discontinued operations (39,185) 341,368

Cash flow from financing activities

Cash and cash equivalents at beginning of the periodCash and cash equivalents at end of the periodCash and cash equivalents at end of the periodCash and balances with treasury banksBalances with other banks


Director - sd -

Director - sd -



Income tax paid

Exchangetranslation General Total

capital account

12,602,602 93,511 234,669 6,755,314 1,772,459 4,090,445 25,549,000 37,908 25,586,908

- - - - 3,982,787 (3,982,787) - - -

- - - - - 2,886,668 2,886,668 8,217 2,894,885- 1,558 - - - (89,597) (88,039) - (88,039)

- 1,558 - - - 2,797,071 2,798,629 8,217 2,806,846- - -

605,523

- (605,523) - - -

Balance as at January 01, 2017


33


ended June 30, 2017Net profit for the half year ended June 30, 2017

Consolidated Condensed Interim Statement of Changes in Equity (Un-audited)


12,602,602 95,069 234,669 7,360,837 3,864,856 2,191,548 26,349,581 46,125 26,395,706

- - - - - 2,235,195 2,235,195 (1,783) 2,233,412- 28,778 -

- - (24,366) 4,412 11 4,423- 28,778 -

- - 2,210,829 2239607 (1,772) 2,237,835- - - 448,054

- (448,054) - - -

- - -

- (1,890,390) - (1,890,390) - (1,890,390)

12,602,602 123,847 234,669 7,808,891 3,864,856 2,703,887 27,338,752 44,353 27,383,105- - - - 2,703,887 (2,703,887) - - -

- - - - - 2,518,301 2,518,301 (953) 2,517,348- 76,235 - - - 17,693 93,928 - 93,928- 76,235 - - - 2,535,994 2,612,229 (953) 2,611,276

ended December 31, 2017

Balance as at December 31, 2017

12,602,602 200,082 234,669 8,313,215 6,568,743 2,136,952 30,056,263 43,400 30,099,663


Net profit for the half year ended December 31, 2017

Final dividend 2016: Rs. 1.5 per share

ended June 30, 2018Net profit for the half year ended June 30, 2018



- - - - - (1,260,260) (1,260,260) - (1,260,260)Interim dividend 2017: Re. 1 per share

- as previously reportedEffect of retrospective change in accounting policy with

respect to accounting for surplus on revaluation of- - - - - (107,658) (107,658) - (107,658)fixed assets

12,602,602 93,511 234,669 6,755,314 1,772,459 3,982,787 25,441,342 37,908 25,479,250Balance as at January 01, 2017 - as restated

Transfer from surplus on revaluation of assets to- - - - - 9,824 9,824 - 9,824unappropriated profit

- - - 504,324

- (504,324) - - -Transfer to Statutory reserveTransfer from surplus on revaluation of assets to

- - - - - 105,282 105,282 - 105,282unappropriated profit


Director - sd -

Director - sd -



Total comprehensive income for the half year



34

Notes to the Consolidated Condensed Interim Financial Statements (Un-audited)For the half year ended June 30, 2018

1. STATUS AND NATURE OF BUSINESS

Askari Bank Limited (the Bank) was incorporated in Pakistan on October 9, 1991 as a Public Limited Company and is listed on the Pakistan Stock Exchange. The registered office of the Bank is situated at AWT Plaza, the Mall, Rawalpindi. The Bank is a scheduled commercial bank and is principally engaged in the business of banking as de�ned in the Banking Companies Ordinance, 1962. The Fauji Consortium: comprising of Fauji Foundation (FF), Fauji Fertilizer Company Limited (FFCL) and Fauji Fertilizer Bin Qasim Limited (FFBL) collectively owned 71.91 percent shares of the Bank as on June 30, 2018. The ultimate parent of the Bank is Fauji Foundation. The Bank has 516 branches (December 31, 2017: 516 branches); 515 in Pakistan and Azad Jammu and Kashmir, including 91 (December 31, 2017: 91) Islamic Banking branches, 43 (December 31, 2017: 43) sub-branches and a Wholesale Bank Branch in the Kingdom of Bahrain.

Askari Securities Limited (ASL) was incorporated in Pakistan on October 1, 1999 under the repealed Companies Ordinance, 1984 as a public limited company. The Bank holds 74% Ordinary Shares of ASL. The principal activity includes share brokerage, investment advisory and consultancy services. The registered office of ASL is situated in Islamabad.

2. BASIS OF MEASUREMENT

These consolidated condensed interim �nancial statements have been prepared under the historical cost convention as modi�ed for certain investments which are carried at fair value, non-banking assets acquired in satisfaction of claims, freehold and leasehold land which are shown at revalued amounts and staff retirement gratuity and compensated absences which are carried at present value of de�ned bene�t obligations net of fair value of plan assets.

3. STATEMENT OF COMPLIANCE

These consolidated condensed interim �nancial statements of the Group for the half year ended June 30, 2018 are un-audited and have been prepared in accordance with the requirements of the International Accounting Standard 34, 'Interim Financial Reporting', requirements of the Companies Act, 2017, the Banking Companies Ordinance, 1962 and the provisions of and directives issued by the State Bank of Pakistan (SBP) and Securities and Exchange Commission of Pakistan (SECP). In case the requirements differ, the provisions of the Companies Act, 2017, the Banking Companies Ordinance, 1962 and the directives issued by SBP shall prevail.

SBP vide BSD Circular No. 10 dated August 26, 2002 has deferred the applicability of International Accounting Standard 39, 'Financial Instrument: Recognition and Measurement' (IAS 39) and International Accounting Standard 40, 'Investment Property' (IAS 40), for banking companies till further instructions. Further, according to the noti�cation of SECP dated April 28, 2008, the International Financial Reporting Standard 7, 'Financial Instruments: Disclosures' (IFRS 7), has not been made applicable for the banks. However, investments have been classi�ed and valued in accordance with the requirements of various circulars issued by SBP.

4. BASIS OF PRESENTATION

These consolidated condensed interim �nancial statements have been presented in accordance with the requirements of format prescribed by the State Bank of Pakistan vide BSD circular letter no. 2 dated May 12, 2004 and International Accounting Standard 34, 'Interim Financial Reporting' (IAS 34) and do not include all the information as required in the annual �nancial statements. Accordingly, these consolidated condensed interim �nancial statements should be read in conjunction with the consolidated �nancial statements of the Bank for the year ended December 31, 2017.

35


In accordance with the directives of the Federal Government regarding shifting of the banking system to Islamic modes, SBP has issued various circulars from time to time. One permissible form of trade-related modes of �nancing comprises of purchase of goods by the Bank from its customers and resale to them at appropriate mark-up in price on deferred payment basis. The purchases and sales arising under these arrangements are not re�ected in these consolidated condensed interim �nancial statements as such but are restricted to the amount of facility actually utilized and the appropriate portion of mark-up thereon.

The �nancial results of the Islamic banking branches have been consolidated in these consolidated condensed interim �nancial statements for reporting purposes, after eliminating material inter branch transactions / balances. Key �gures of the Islamic banking branches are disclosed in Annexure to the unconsolidated condensed interim �nancial statements.

These consolidated condensed interim �nancial statements are presented in Pak Rupee which is the Group's functional and presentation currency. Figures have been rounded off to the nearest thousand of rupees unless otherwise stated.

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies and methods of computation adopted in the preparation of these consolidated condensed interim �nancial statements are the same as those applied in the preparation of the consolidated �nancial statements of the Group for the year ended December 31, 2017 except for the following:

Consequent to the enactment of the Companies Act, 2017 (the Act), the Group has changed its accounting policy for treatment of de�cit on revaluation of �xed assets wherein any decrease in carrying amount of �xed asset as a result of revaluation is charged to pro�t and loss account, however the decrease shall be recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of that asset. Previously, any decrease in the carrying amount of �xed assets was netted off against surplus on revaluation of any other �xed assets. Had the accounting policy not been changed, the surplus on revaluation of �xed assets would have been lower by Rs. 107,658 thousand and unappropriated pro�t would have been higher by the same amount. The change in accounting policy has been accounted for retrospectively and the corresponding �gures have been restated. Since the impact of the above change in accounting policy is considered immaterial, the Group has not presented the third statement of �nancial position for the year prior to last year. The effect of the restatement has been disclosed in note 16.2 to these consolidated condensed interim �nancial statements.

Amendments and interpretations to approved accounting standards effective from January 1, 2018 are not expected to have a material impact on these consolidated condensed interim �nancial statements.

6. ACCOUNTING ESTIMATES

The basis for accounting estimates adopted in the preparation of these consolidated condensed interim �nancial statements are the same as those applied in the preparation of the consolidated �nancial statements of the Group for the year ended December 31, 2017.

7. FINANCIAL RISK MANAGEMENT

The �nancial risk management objective and policies adopted by the Group are consistent with those disclosed in the consolidated �nancial statements of the Group for the year ended December 31, 2017.

36


8. INVESTMENTS

Investments by types:


December 31, 2017 - (Audited)Held by Given as Total

the Bank collateral

101,156,523 28,801,009 129,957,53217,556,510

----

-

June 30, 2018 - (Un-audited)TotalHeld by

the BankGiven ascollateral

119,415,130 33,005,213 152,420,343112,799,616 2,625,524

4,757,813 -1,275,794 -

27,314 -4,649,279 -

14,105,138 627,665

Held to maturity securitiesGovernment of Pakistan Euro BondsSukuk Certi�cates

Investments at cost

Provision for diminution in the value of investmentsInvestments - net of provisionsSurplus / (de�cit) on revaluation of

available for sale securities - netTotal investments

-46,357,519

1,318,629 1,706,2222,294,387

1,054,2083,613,016

2,760,430267,280,322 49,117,949

(2,042,279) - (2,042,279)265,238,043 49,117,949 314,355,992

399,719 201,037 600,756265,637,762 49,318,986 314,956,748

931,029 -258,350,393 36,508,291

1,003,396 2,304,3103,513,615 1,804,0464,517,011 4,108,356

262,867,404 40,616,647

(2,205,345) - (2,205,345)260,662,059 40,616,647 301,278,706

(1,502,753) (19,759) (1,522,512)259,159,306 40,596,888 299,756,194




--

389,280 -- 249,889

294,858,684

115,425,1404,757,8131,275,794

27,3144,649,279

14,732,803

931,029

389,280249,889

263,667,306

136,643,7654,546,8511,600,876

27,3145,747,142

12,768,137

573,033

375,075228,590

310,024,825

154,200,2754,546,8511,600,876

27,3145,747,142

12,768,137

573,033

375,075228,590

3,307,7065,317,6618,625,367

303,484,051

3,024,8513,348,5956,373,446

316,398,271

9. ADVANCESLoans, cash credits, running �nances, etc.

In PakistanOutside Pakistan

Islamic �nancing and related assets - note A - 1 of AnnexureNet investment in �nance lease - In PakistanBills discounted and purchased (excluding treasury bills)

Payable in Pakistan Payable outside Pakistan

Advances - grossProvision for non-performing advances - note 9.1

Speci�c provisionGeneral provisionGeneral provision against consumer loans

Advances - net of provision

(Audited)

December 31,2017

223,766,6457,688,190

231,454,83534,755,797

8,652,030

3,516,0945,960,9149,477,008

284,339,670

(24,962,069)(236,940)(447,575)

(25,646,584)258,693,086


2018

263,892,5257,011,271

270,903,796

43,991,1428,427,076

6,703,7297,589,973

14,293,702337,615,716

(24,368,173)(287,596)(508,984)

(25,164,753)312,450,963


37

Notes to the Consolidated Condensed Interim Financial Statements (Un-audited) For the half year ended June 30, 20189.1 Particulars of provision against non-performing advances


June 30, 2018 - (Un - audited)Consumer

Financing -General

Total

25,646,5841,088,694

(1,570,525)

25,164,753

447,57561,409

-

508,984

General

236,94051,389

(733)

287,596

Speci�c

24,962,069975,896

(1,569,792)

24,368,173


Total

26,959,3341,018,822

(2,208,355)

25,646,584

ConsumerFinancing - General

368,59990,267

(11,291)

447,575

General

236,94437,450

(37,454)

236,940

Speci�c

26,353,791891,105

(2,159,610)

24,962,069

(481,831)61,40950,656(593,896) (1,189,533) 78,976 (4) (1,268,505)

9.2 TThe net Forced Sale Value (FSV) bene�t already availed has been reduced by Rs. 82,934 thousand, which has resulted in an increased charge for speci�c provision for the period by the same amount. Had the FSV bene�t not reduced, before and after tax pro�t for the period would have been higher by Rs. 82,934 thousand (2017: Rs. 219,497 thousand) and Rs. 53,907 thousand (2017: Rs. 142,673 thousand) respectively. Further, at June 30, 2018, cumulative net of tax bene�t of FSV is Rs. 666,296 thousand (December 31, 2017: Rs. 720,203 thousand) under BSD circular No. 1 of 2011 dated October 21, 2011. Reserves and un-appropriated pro�t to that extent are not available for payment of cash or stock dividend.

9.3 The Group has availed the relaxation of Rs. 102,460 thousand (December 31, 2017: Rs. 102,460 thousand) allowed by the SBP for maintaining provisions as per time based criteria of Prudential Regulations.

9.4 Advances include Rs. 26,519,585 thousand (December 31, 2017: Rs. 26,753,027 thousand) which have been placed under non-performing status as detailed below:

---- (123,217)--(123,217)

Opening balanceCharge for the period / yearReversal for the period / yearNet (reversal) / charge for the period / year

Closing balance

Amounts charged off - agri loans


December 31, 2017 - (Audited)Classi�ed Advances Provision Provision


June 30, 2018 - (Un-audited)Classi�ed Advances Provision Provision


137,409 - - -137,409118,878 - 15,600701,369 - 280,067

25,795,371 - 24,666,40226,753,027 - 24,962,069

118,878701,369

25,795,37126,753,027

15,600280,067

24,666,40224,962,069

140,122 - - -140,122553,490 - 107,316931,893 - 434,020

24,894,080 - 23,826,83726,519,585 - 24,368,173

553,490931,893

24,894,08026,519,585

107,316434,020

23,826,83724,368,173








9.4.1 This represents classi�cation made for Agricultural, Mortgage and Small Entities �nances.

38

Notes to the Consolidated Condensed Interim Financial Statements (Un-audited)

Note

10. OPERATING FIXED ASSETS

10.1

Provision against operating �xed assets

Capital work-in-progressProperty and equipmentIntangibles 10.2

10.1 Property and equipmentBook value at beginning of the period / yearCost of additions / revaluation during the period / yearBook value of deletions / transfers during the period / yearDepreciation charge for the period / yearBook value of adjustments during the period / yearBook value at end of the period / year




2017

160,6369,764,664

827,93110,592,595

(24,404)10,728,827

9,851,6691,260,980

(28,684)(1,326,435)

7,1345129,764,664


2018

157,8009,622,447

737,13210,359,579

(24,404)10,492,975

9,764,664378,569(11,538)

(509,760)

9,622,447

10.2 IntangiblesBook value at beginning of the period / yearCost of additions during the period / yearAmortization charge for the period / yearBook value at end of the period / year

922,212102,195

827,9317,034

(196,476)827,931

(97,833)737,132

11. DEFERRED TAX ASSETS

(354,053)

-

71,2781,213,954

532,879155,740

1,902,573

(375,702)

450,177

71,278145,753

(210,265)165,267100,755

Deferred (credits) / debits arising due to:Accelerated tax depreciation and amortizationProvision against non-performing advances

- excess of 1% of total advances

- classified in sub-standard category

Surplus on revaluation of available for sale securitiesActuarial losses

- prior year charge on NPLs disallowance - note 11.1 1,496,729 -

11.1 This represents deferred tax on provision for NPLs classi�ed prior to enactment of the seventh schedule of Income Tax ordinance 2001 which NPLs are disallowed consequent to the order of Islamabad High Court through its order dated March 13, 2018.


39

Assets attributable to discontinued operationsCash and balances with treasury banksBalances with other banksLendings to �nancial institutions InvestmentsAdvancesOperating �xed assetsDeferred tax assetsOther assets

12.1.1

12. DISCONTINUED OPERATIONS An analysis of the assets and liabilities attributable to discontinued operations at the balance sheet date is

as follows:


-167,994

-40,411

810

21,017

-133,494

-76,477

81019,888

December 31,2017

(Audited)June 30,

2018

(Un-audited)

-97,717

-60,104

327,949290,773

12.1

Liabilities associated with discontinued operationsBills payableBorrowingsDeposits and other accountsSub-ordinated loansLiabilities against assets subject to �nance leaseOther liabilities

-

-

--

110,107110,107

-

--

--

140,741140,741

-

40


Note

304

23,204240

-32,991

-151

56,586

25,679--

(254)-

191(63)

304

--31,211

31,148

537

16,55980

-4,487

314225

21,665

23,315--

537

(1,113)

(4,271)

285

(13,965)80

-8,523

(4,749)(132)

(10,243)

(21,312)- -

7,091-

967,187

285

-11,354

18,541

357

7,01580

-4,487

314101

11,997

11,803--

-

(1,911)--

(1,911)

357

551

(1,360)

(3,158)--

(3,158)


2018June 30,

2017


2018June 30,

2017

59053

304-

41053

285-

----

----

----

----

Provision / (reversal) against non-performing loans and advances - net

Provision for diminution in the value of investments - net


Bad debts written off directly













Other income

Non mark-up / interest expencesAdministrative expensesOther provisions / write offsOther charges



12.1.2 Financial Performance

25,67923,315 (21,312)11,803

12.1.3 Other comprehensive income31,148

(22,073)(4,271)(4,248)

18,541(3,190)

(1,360)(9,874)

Profit after taxSurplus / (deficit) on revaluation of assets - net of taxTotal comprehensive income 9,075(8,519) 15,351(11,234)

For the half year ended June 30, 2018Notes to the Consolidated Condensed Interim Financial Statements (Un-audited)

41


(Audited)December 31, 2017June 30, 2018

(Un-audited)

13. BORROWINGS

14. DEPOSITS AND OTHER ACCOUNTSCustomers

Fixed depositsSavings depositsCurrent accounts - remunerativeCurrent accounts - non-remunerativeSpecial exporters' accountMargin accountsOthers

Financial institutionsRemunerative depositsNon-remunerative deposits

81,535,107291,527,924

751,535143,678,468

150,6363,514,7471,163,372

2,817,279665,983

525,805,051

315,504,553

86,351,668

604,716

162,910,678

181,4443,286,9191,271,543

2,654,714419,107

573,185,342

12,029,46110,891,099 4,673,546

16,838,601

40,522,9458,622,609

49,145,554

5,599,68871,583,843

3,46871,587,311

5,164,799

16,299,924

25,703,54813,189,36838,892,916

9,085,66564,278,505

1,899,637 66,178,142

In Pakistan - local currency

Repo borrowings

Unsecured

Outside Pakistan - foreign currencies

- State Bank of Pakistan- Financial Institutions

- Call borrowings

- Overdrawn nostro accounts - unsecured

Borrowings from the State Bank of Pakistan: - Export re�nance scheme - Long term �nancing facility - Financing facility for storage of agricultural produce

Secured

- Renewable energy �nancing facility9,167

126,4277,500

236,526

15. SUB-ORDINATED LOANS

Term �nance certi�cates - IVTerm �nance certi�cates - VTerm �nance certi�cates - VI (ADT - 1) - note 15.1

997,6003,995,200

-

-3,994,4005,505,000

4,992,8009,499,400

15.1 This represents amount received upto June 30, 2018 against issuance of term �nance certi�cates (TFC VI - ADT 1) of Rs. 6 billion issued on July 3, 2018 and is admissible against tier 1 capital of the Bank as at June 30, 2018 as approved by SBP through its letter dated July 26, 2018.

(Rupees in thousand)June 30, 2017

(Un-audited)June 30, 2018

(Un-audited)

37,208(39,185)

-

(1,419)341,368

-

Net cash �ows from operating activitiesNet cash �ows from investing activitiesNet cash �ows from �nancing activities

12.1.4 Cash �ow information


42


16. SURPLUS ON REVALUATION OF ASSETS - NET OF TAXSurplus on revaluation of:

Related deferred tax

i) Federal Government securitiesii) Listed sharesiii) Units of open end mutual fundsiv) Other securities

Operating �xed assetsNon banking assets acquired in satisfaction of claims - note 16.1Available for sale investments

1,503,492(981,249)

51,25927,254

600,756(210,265)390,491

5,142,254

2,940,1281,811,635

(1,109,617)(470,805)

61,126(3,216)

(1,522,512)532,879

(989,633)3,655,942

2,940,1281,705,447



2017


2018Restated

16.1 Non-banking assets acquired in satisfaction of claims

Surplus on revaluation as at begining of the period / year 1,617,8601,811,635Recognised during the period / year 203,599-Realised on disposal during the period / year (3,278)(103,662)Transferred to unappropriated pro�t in respect of incremental

depreciation charged during the period / year (6,546)(1,620)

Surplus on revaluation as at end of the period / year 1,811,6351,705,447Adjustment during the period -(906)

16.2 Prior period effect of change in accounting policy for revaluation of operating �xed assets

The effect of restatement consequent to change in accounting policy as stated in note 5 to these consolidated condensed interim �nancial statements is summarized below:

Statement of Financial Position

Increase in surplus on revaluation of operating �xed assetsDecrease in unappropriated pro�t at year end



2016Restated


2017Restated

107,658107,658

107,658107,658

17. CONTINGENCIES AND COMMITMENTS

17.1 Direct credit substitutes

ii)i) Government

Others 10,884,649416,852

6,002,4933,418,614



2017


2018

11,301,5019,421,107

43




2017


201817.2 Transaction-related contingent liabilitiesMoney for which the Bank is contingently liable:

Contingent liability in respect of guarantees given on behalf of directors or officers or any of them (severally or jointly) with any other person, subsidiaries and associated undertakings

Contingent liability in respect of guarantees given, favouring:i) Governmentii) Banks and other �nancial institutionsiii) Others

671,079

101,289,688

8,480,982

31,580,906141,351,576142,022,655

1,058,218

137,189,655

612,44327,213,245

165,015,343166,073,561

These include guarantees amounting to Rs. 1,526,647 thousand (December 31, 2017: Rs.1,564,564 thousand) against which the Group is contesting court proceedings and these are not likely to result in any liability against the Group.

17.3 Trade-related contingent liabilities

17.4 Other Contingencies


211,032,705

916,105


2018

173,128,678

778,013


2017

These represent certain claims by third parties against the Group, which are being contested in the Courts of law. The management is of the view that these relate to the normal course of business and are not likely to result in any liability against the Group.

17.5 Commitments in respect of forward lendingCommitment against "Repo" transactions

Purchase and resale agreementsSale and repurchase agreements

17.7 Commitments in respect of forward exchange contractsPurchaseSale

The above commitments have maturities falling within one year

17.9 Commitments for acquisition of operating �xed assets

1,515,75249,250,012

26,354,4789,083,720

119,195

4,513,68338,960,558

28,579,9509,855,026

70,156

17.6 Commitments in respect of forward SaleForward sale of Government Securities - 5,000,000

17.8 Commitments in respect of forward purchase / sale of listed equity securities 9,6903,333



44



2017June 30,

2018

(Un-audited)

17.11 Other commitmentsThis represents participation in the equity of Pakistan Mortgage Re�nance Company Limited

17.12 Bills For CollectionPayable in PakistanPayable outside Pakistan

18. TAX STATUS

(i) TThe Group has �led tax returns for and up to tax year 2017 (year ended 31 December 2016). The assessments for and up to tax year 2017 were amended by the tax authorities mainly in the matters of admissiblity of provisions against doubtful debts and diminution in the value of investments, bad debts written off, aportionment of expenses to income exempt from tax or taxable at a lower rate and basis of taxation of commission and brokerage income.

Tax payments made in relation to the matters currently pending are being carried forward as receivable, as management is con�dent of their realization as and when the appeals are decided.

The Group makes commitments to extend credit in the normal course of its business but these being revocable commitments do not attract any signi�cant penalty or expense if the facility is unilaterally withdrawn except for

17.10 Commitments to extend credit

281,640

4,502,30615,768,12020,270,426

14,826,508

-

4,368,41220,713,39425,081,806

15,242,908

(ii) Consequent upon the amalgamation with and into the Group, the outstanding tax issues relating to Askari Leasing Limited (ALL) are as follows:

Tax returns of ALL have been �led for and up to tax year 2010. The returns for the tax years 2003 to 2010 were amended by the tax authorities mainly in the matter of admissibility of initial allowance claimed on leased vehicles. On appeals �led by ALL, partial relief was provided by the CIR(A) by allowing initial allowance on commercial vehicles. Re-assessment has not yet been carried out by the tax department. A tax demand is however not likely to arise after re-assessment.

For and up to the assessment years 2002-2003, reference applications �led by the tax authorities in the matter of computation of lease income are pending decisions by the High Court. However the likelihood of an adverse decision is considered low due to a favourable decision of the High Court in a parallel case.

19. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of traded investments is based on quoted market prices, except for securities classi�ed by the Bank as ‘held to maturity’. Securities classi�ed as held to maturity are carried at amortized cost. Fair value of unquoted equity investments is determined on the basis of break up value of these investments as per the latest available audited �nancial statements.

Fair value of �xed term loans, other assets, other liabilities and �xed term deposits cannot be calculated with sufficient reliability due to the absence of current and active market for such assets and liabilities and reliable data regarding market rates for similar instruments. The provision for impairment of loans and advances has been calculated in accordance with the Group’s accounting policy as stated in note 5 to annual �nancial statements.



45

Fair value of remaining �nancial assets and liabilities except �xed term loans, staff loans, non-performing advances and �xed term deposits is not signi�cantly different from the carrying amounts since assets and liabilities are either short term in nature or are frequently repriced in the case of customer loans and deposits.

The Group measures fair values using the following fair value hierarchy that re�ects the signi�cance of the inputs used in making the measurements:

Level 1: Fair value measurements using quoted prices (unadjusted) in active markets (Pakistan Stock Exchange) for identical assets or liabilities.

Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) available at MUFAP, Reuters page, Redemption prices and determined by valuers on the panel of Pakistan Banker's Association .

Level 3: Fair value measurements using input for the asset or liability that are not based on observable market data (i.e. unobservable inputs).

The table below analyses the �nancial and non-�nancial assets carried at fair values, by valuation methods. Valuation of investments is carried out as per guidelines speci�ed by the SBP. In case of non-�nancial assets, the Group has adopted revaluation model (as per IAS 16) in respect of land and non-banking assets acquired in satisfaction of claims.


- 152,402,884 -- 114,420,625

3,454,680-

66,720236,017497,840

-4,255,257 286,296,290

--

689,280

-300,000

----

-

389,280-


-1,336,920

-3,336,008

13,662,305-

238,438899,110

Financial assets:Available for sale securities

Market Treasury BillsPakistan Investment BondsFully paid ordinary shares / unitsUnits of open end mutual fundsFully paid preference sharesTerm Finance Certi�catesSukuk Certi�cates





Non-banking assets acquired in satisfaction of claims - --

5,096,3179,993,702-

- - 4,897,385








Non-banking assets acquired in satisfaction of claims


- 129,956,900 -- 155,714,864

3,384,942-

66,720703,899575,400

-18,360

----


-1,652,135

-3,770,651

11,674,521

-4,730,961 303,568,906 393,435

-571,409

- - 5,001,571

- - 4,789,727

The Group’s policy is to recognise transfers into and out of the different fair value hierarchy levels at the date the event or change in circumstances that caused such transfer takes place. There were no transfers between levels 1 and 2 during the period.

Financial assets:(Rupees in thousand)


--

375,075-

-228,426

46

- 9,791,298-

20. SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIESThe segment analysis with respect to business activity is as follows:-

Total income Total expensesNet income / (loss)

Total income Total expensesNet income / (loss)



CorporateFinance

Trading andSales

Retail Banking

Commercial Banking

Rupees in thousands

Payment andSettlement

AgencyServices

AssetsManagement

RetailBrokerage Total


145,894 15,655

130,239

10,719,044 8,966,624

1,752,420

779,587770,103

9,484

9,355,2346,483,6862,871,548

92,2329,897

82,335

25,388 2,724

22,664

- -

-

56,890 25,679

31,211

21,174,269 16,274,368 4,899,901


94,094--

1,0780.050.05


87,2878,131

79,156

9,657,2328,712,289

944,943

1,057,099885,820171,279

11,132,9538,043,6173,089,336

82,810

7,714

75,096

22,25523,368(1,113)

22,070,56117,683,820

4,386,741

30,925

2,881

28,044

---


160,534--

1,9970.090.10

20,842,1152,138,1052,464,333

309,181 0.62 0.65

17,383,2282,249,0842,398,724

284,660 0.50 0.53

364,896,01324,381,48024,123,547

635,080,4336.546.87

317,616,96725,053,59324,408,158

566,880,087 5.99 6.33

33,337--

382 0.02

0.02

27,936

-

-3480.020.02

------

-

-

----

357,580-

66,807110,107

0.010.01

402,993

-

66,215138,273

0.040.04

733,709,65326,519,58527,883,155

672,055,264

658,301,29227,302,67728,332,972

596,340,538

89,268--

1,0220.050.05

101,487--

1,2630.060.06

347,397,246-

1,228,46836,553,061

5.675.96

322,608,147-

29,033,910 6.86 7.25

1,459,875


47


21. RELATED PARTY TRANSACTIONS Fauji Consortium comprising of Fauji Foundation, Fauji Fertilizer Company Limited and Fauji Fertilizer Bin Qasim

Limited ("the Parent") holds 71.91% (December 31, 2017: 71.91%) of the Bank's share capital at the period end. The Bank has related party relationships with entities under common directorship, its directors, key management personnel and their lineal ascendants and descendants, entities over which the directors are able to exercise significant influence and employees' funds.

Banking transactions with the related parties are executed substantially on the same terms, including mark-up rates and collateral, as those prevailing at the time for comparable transactions with unrelated parties and do not involve more than normal risk (i.e. under the comparable uncontrolled price method) other than those under terms of employment.

Details of transactions with related parties during the half year and balances as at June 30, 2018, are as follows:

22. RECLASSIFICATION OF COMPARATIVE FIGURES

There has been no significant reclassification in these consolidated condensed interim financial statements except an amount of Rs. 94,872 thousand for the period ended June 30, 2017, which has been reclassified from other income to fee, commission and brokerage income.

23. DATE OF AUTHORISATION

These consolidated condensed interim financial statements were authorized for issue by the Board of Directors on August 16, 2018.

In addition to above, rent free sub-branch is operating at FFC head office, Sona Tower.

Balances outstanding as at - Advances

liabilities for irrevocable commitments and contingencies

- Investments in shares / units

- Security deposits payable

Transactions during the half year ended- Mark-up / interest earned- Net mark-up / interest expensed- Contributions to employees' funds

- Rent of property / service charges paid

- Remuneration and allowances paid- Post employment bene�ts

SecuredUn-secured

- Mark-up receivable

- Fee, commission and brokerage income- Fee, commission and brokerage paid

- Assets held for sale - net of provision- Contribution payable to employees' funds

- Deposits - in local currency

- Mark-up payable - in local currency

- Outstanding commitments and contingent

- Deposits - in foreign currencies- Sub-ordinated loans

- Mark-up payable - in foreign currencies

- Security deposits receivable

- Dividend received- Rent received

- Dividend paid- Fees and other expenses paid- Gain on sale of assets held for sale

(Rupees in thousand)December 31, 2017 - (Audited)




Parent

5,674,098

20,193

-

494

16,928127,407

-10,169

--

781,073--

50,000

40-

--

Key management

personnel

160,366

-

-

504

5,6142,736

--

216,60514,691

390,8476,408

56,346

1,515

--

--

Directors

27,047

--

-

- 237

--

--

-695

-

18

--

--


under 20%

6,452,719

1,878,456162,561

59,772

144,749196,519

--

--

3,797,303-

27,229

11,038

1,249 46

--

OtherRelatedParties

3,042,573

--

-

- 47,551

275,571-

1,981-

---

6,513

--

-489,526

Parent

10,847,876

3,234,242-

494

23,317274,560

-10,141

--

4,109,199-

10,216

22,080

42-

--

Key management

personnel

111,722

-

-

287

6,2532,602

--

223,59112,268

360,7578,539

58,638

1,886

--

--

Directors

9,837

--

-

47,000782

2,636

1,948206

--

--

31

--

--


under 20%

4,519,959

1,332,131466,472

114,048

4,099,549-

71,257

148,756269,636

--

--

17,714

10,697236

--

OtherRelatedParties

4,101,765

--

-

-93,046

253,938-

2,040-

4,267

---

--

-94,338

96,617 26,222 1,954 757,299 -195,007 33,048 1,349 794,737 -- - - 24,975 -- - - 24,965 -

458 77 2 5,560 -246 56 - 3,064 -

3,600 - - - -3,600 - - - -

- - - - -- - - 4,132 - - - - - -- - - 749 -

1,359,423--

133250

-

22,388

-

- -

-

11,745--

---

---

-2,644

-

---

---


Director - sd -

Director - sd -




Prin

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by: S

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akbl.com.pk

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